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Op-Ed: Supply Chain Managers Should Embrace Yin & Yang

These are the best of times, these are the worst of times, as the saying goes. Traditional institutions and processes in our industry are under siege and a revolution is underway. How we respond to change will determine which of these “times” prevail—the best or worst.

This was the focus of the last of the three advisory sessions that European supply chain executives reflected upon in their final meeting in of the European Supply Chain Advisory Panel in Milan, Italy. Impacted by the success of fast fashion, the failure of department stores, the rise of Amazon, the decline of the Gap, the growth of direct to consumer selling versus the “middleman” model, in all instances the ascendency of disruptive retailing has changed the rules of the game and rebellious consumers keep egging them on.

[Read Part II in this three-part series: For Supply Chain Managers, Success Means Becoming Storytellers]

The impact of “disruptive changes” have pushed all mass market fashion players to try to speed up their supply chains, reduce lot size, design a better flow process for enhancing their product/fashion newness capability. All participants agreed that more up-market players, suspended between fast fashion replicas and the crisis of the traditional seasonal cycles, have in many cases tried to embrace “see now, buy now” somehow trying to mimic some of fast fashion’s methods (at least for certain collections or capsules), but they are slowly realizing that speed-to-market and fast fashion are not the same thing and the latter is not easily replicated, plus, responsiveness often remains elusive.

Omnichannel distribution, once fully understood, will indeed impose even more challenging expectations on the supply chain. “…Very soon we will have to seriously face our CEO asking for mass customization, a nightmare!” confessed one of the participants in the European Supply Chain Advisory Panel.

So, what’s to be done, what was the takeaway

  1. C-level management, more specifically CEO’s, must lead and insist on a new supply chain model where responsiveness becomes a primary corporate brand value
  2. Responsiveness cannot be achieved without enterprise-wide integration of decision-making, converting departments to teams and silos to collaborations
  3. Vendors must be treated as partners and be fully empowered through end-to-end visibility to act as “fast responders” by anticipating and predicting, through advanced analytics, what might be needed and expected of them

Meeting market demand was understood as more than just a matter of speed but also of flexibility, without which real time responsiveness is not possible

Participants felt they were in an ongoing battle against time wasted in all its manifestations. As a glaring example, one panelist voiced his observation that separate functionalities, that is the absence of an integrated team approach (aka silos), created unacceptable redundancies.

“The first necessary step is to start from eliminating the root causes of those activities repeated over and over along the development, industrialization, manufacturing and distribution path; to the point of switching from a sequential approach to a model where activities are executed in parallel,” operations director for a leading luxury powerhouse, said.

But to do so, the head of supply chain of a leading brand that has greatly committed to a see now, buy now test project, captured, in his observation, the real challenge ahead: “More than a matter of pure technicality (plenty of technologies and managerial tools are available) it is a matter of organization and decision process. It is a people issue more than everybody realizes.”

Consequently, technology platforms such as enterprise-wide dashboards may offer visibility, but can only go so far as they do not guarantee integration or a willingness to embrace the new model which may require a clear confirmation that this is an internal brand promise confirmed by the CEO. What clearly emerged from these workshops was that leadership, integrated and fully aligned team work, re-engineered and shared calendars, were recognized by the panelists as not new ideas but still the most important ingredients for change.

But for change to be fully embraced by its recipients it must therefore also be “engineered” from the top.

The urgency and priority of these initiatives is reflected in a survey of these supply chain executives as the results of the following chart demonstrate. The overwhelming “vote of the panelists as to the top three speaks for itself.

Where fashion supply chains will concentrate most in the next 5 years.  

Finally, the participants agreed that brands and retailers, when called to re-engineer their supply chains to respond to increasingly disruptive market dynamics, must also include in their “orchestrated systems” their vendors, or better, manufacturing partners. Collaboration must become the norm.

Here, again, it is a matter of understanding where and how value is created. Rather than negotiating for every nickel and dime which is too often the priority that the cost-first model engenders, something new must take its place.

What emerged from these exchanges was the idea that to effectively achieve this supply chain transition, it will require seeing the old model and the new model not in conflict with each other but as two aspects of one reality. As with Yin and Yang, which sees opposites as complements, we should see change not as a contest among opposites in tension but as complements in collaboration with one another.

The conclusion drawn was that when effective leadership orchestrates this change as an expression of an organization organically evolving, rather than two business models conflicting, the worst of times will have blended into the best of times.

 

*The European Supply Chain Advisory Panel has been organized under the direction of Flavio Sciuccati senior partner and head of the Global Fashion Unit of The European House – Ambrosetti, the No. 1 think tank in Italy and in the top 20 of global business and fashion consultancies.

Bill D’Arienzo is the founder and CEO of WDA Brand Marketing in Princeton, New Jersey, and ApparelAnalytics an online consumer research service, and serves as U.S. strategy advisor for The European House – Ambrosetti.

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